City to loan RSI $484,234 to be repaid with 82 new jobs

The City Council is expected to vote on an agreement with RSI, Inc., that will grant the company an interest-free loan of $484,234, which the company will repay by hiring 82 additional employees during the next 10 years.

The hiring of the 82 new employees is supposed to bring the total workforce at RSI to 132. Each employee must work at least 30 hours a week for the company to qualify for the repayment.

Under terms of the agreement, RSI is expected to hire seven new employees in each of the first seven years of the loan agreement, 10 new employees in year eight, 11 in year nine and a dozen in the final year. None of the new employees may be undocumented workers.

RSI, Inc., currently owns a five-acre tract at 1670 Kohler’s Crossing. The company describes itself as "an authorized distributor of electro-mechanical parts and services to global industries and markets such as (the) Department of Defense, energy markets, commercial aerospace, industrial markets, and transportation industries."

It is assumed that an increase in the number of employees at RSI will translate into an increase in sales which will mean more sales tax dollars for the city’s coffers. It could also increase the value that five-acre tract RSI owns which would also mean additional revenues to the city.

The loan balance will decrease by one-tenth of the original balance ($48,423.40) every year RSI meets its hiring obligations. If, at any time, the company fails to meet those obligations, the agreement requires RSI to "pay to the city the full balance of the loan payment upon thirty days after receiving notice from the City." In other words, if, in year 5 of the deal, RSI only adds five new employees to its work force, it would be required to pay the city $13,835.26, or two-sevenths of the annual loan installment.

The agreement also requires RSI to "retain and maintain a local intern program and provide opportunity for at least two Hays CISD students for a summer internship each year of this agreement."

There’s also an incentive for RSI to help the city with additional economic development. According to the agreement, "For every meeting (RSI) sets up between the city and executive-level decision-makers from other companies that the city agrees are potential economic development prospects for the city, the city will credit (RSI) $1,000 per qualified meeting. The maximum of these meeting credits is $25,000 for the 10-year period of this agreement."

In other action planned for Tuesday, the council is expected to approve the nominations of seven persons to the Kyle Area Youth Advisory Council and one, chiropractor Ryan Browning, to the Ethics Commission; approve a template that could be used as part of development agreements covering the delivery city utilities to areas proposed tor annexation; and, of course, finally approve a budget for the fiscal year that begins Oct. 1 (I'm betting the vote on this will be 6-1) and the corresponding tax rate.

The complete agenda can be found here.